How Employers Should Handle Employee Misconduct in Malaysia Fairly

Employee misconduct is often viewed solely as bad behavior. However, how misconduct is addressed is just as important as the incident itself.

Improper disciplinary action can expose employers to unfair dismissal claims, Industrial Court disputes, and reputational damage. That is why HR must manage misconduct cases using a structured, documented, and progressive approach, in line with Malaysian employment practices.

What Is Employee Misconduct?

Employee misconduct refers to any action or behaviour by an employee that breaches company rules, policies, or acceptable workplace conduct.

Employee misconduct does not carry the same weight in every situation. Some cases involve minor lapses in discipline, while others may seriously affect safety, trust, or the company’s reputation.

Because of this, HR must assess each case carefully based on the facts, the impact of the behaviour, the employee’s intent, and any previous disciplinary records before deciding on action.

As a starting point, misconduct is generally classified into minor misconduct and major misconduct. This distinction helps HR determine the appropriate disciplinary approach and avoid taking action that may later be seen as excessive or unfair.

Progressive Disciplinary Action

Progressive disciplinary action is a step-by-step approach to managing employee misconduct, starting with corrective actions and escalating only when necessary.

Why progressive discipline is important in Malaysia:

Shows the employer acted fairly and reasonably
Gives employees a clear opportunity to improve
Aligns with principles under the Employment Act 1955 and Industrial Relations Act
Strengthens the employer’s defence if a dispute reaches the Industrial Court

Minor Misconduct

Minor misconduct involves acts of indiscipline that cause limited disruption and do not seriously harm company assets, safety, or trust.

Common Examples of Minor Misconduct

Occasional late attendance
Short-term absence without leave
Leaving work early without approval
Failure to wear uniform or staff ID
Careless handling of company equipment
Ignoring basic safety instructions
Using company property for personal reasons

Minor misconduct is usually a supervisory issue, not an immediate HR disciplinary case.

How HR Should Handle Minor Misconduct

Minor misconduct should be handled calmly and systematically. HR (or supervisors) should:

Record the complaint or incident in writing
Conduct a simple investigation:
- What happened
- When and where
- Any witnesses or evidence
Allow the employee to explain their side
Inform the employee officially if:
- No misconduct is proven, or
- Misconduct is established and action will be taken

Remember that no warning should be issued without investigation, even for minor cases.

Progressive Actions for Repeated Minor Misconduct

If minor misconduct continues, HR may escalate actions gradually.

Typical Progressive Disciplinary Steps

Counselling

Verbal or informal discussion to clarify expectations and correct behaviour.

First Warning Letter

Usually issued by the supervisor or Head of Department. Focuses on behaviour, not punishment.

Second Warning Letter

Typically issued by HR. Clearly states consequences if behaviour continues.

Escalation to Major Misconduct

Only when repeated behaviour shows disregard for warnings.

Why is documentation critical? Written records prove that the employee was informed, warned, and given opportunities to improve.

Major Misconduct

Major misconduct involves behaviour that causes serious harm, safety risks, or loss of trust.

Common Examples of Major Misconduct

Insubordination or refusal to follow lawful instructions
Theft, fraud, or dishonesty
Physical violence, assault, or verbal abuse
Bribery or corrupt practices
Drug or alcohol abuse at work
Serious negligence of duties
Major safety violations
Chronic poor performance despite warnings
Destroying or falsifying company records
Conducting private business during working hours

Major misconduct may justify dismissal, but only if due process is followed.

How HR Should Handle Major Misconduct

All major misconduct cases must be handled carefully and objectively. HR should:

Conduct a proper investigation before deciding on any action
Consider interim measures such as suspension with half pay (pending investigation)
Issue a show-cause letter explaining:
- Allegations
- Evidence
- Required explanation from the employee

Employees must be given a reasonable time to respond, commonly:

Around five working days
Longer for complex cases

Skipping investigation or rushing to dismissal increases legal exposure.

Domestic Inquiry & Dismissal

A domestic inquiry is a formal internal investigation process to determine whether misconduct occurred.

When a Domestic Inquiry Is Required

Allegations involve serious misconduct
The employee’s explanation of the show-cause letter is unsatisfactory
Dismissal is being considered

Possible Outcomes of a Domestic Inquiry

Final warning
Other disciplinary action
Dismissal (only if misconduct is proven)

Dismissal must be based on evidence, fairness, and due process, not assumptions or pressure.

FAQs

What is the difference between minor and major misconduct?

Minor misconduct causes limited harm and can be corrected. Major misconduct involves serious breaches, safety risks, or loss of trust.

How many warning letters can HR issue?

There is no fixed number, but actions must be reasonable, consistent, and documented.

Is a domestic inquiry mandatory before dismissal?

Yes, especially for serious misconduct, to ensure procedural fairness.

Can an employee be dismissed for repeated minor misconduct?

Yes, if progressive steps were followed and behaviour did not improve.

How long should HR give an employee to respond to a show-cause letter?

Usually around five working days, or longer if justified by case complexity.

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